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The Board “Technology Committee”: Is it The Right Time?

A series of factors is prompting corporate boards across industry sectors to consider the establishment of a standing committee with responsibility for technology oversight.

Much of the interest in such a committee is grounded in the dramatically increased importance of technology to corporate affairs. In addition, formation of a full-fledged technology committee represents a logical next step from board oversight of cybersecurity matters. Creation of a “specialty” committee is also consistent with emerging board practices advocating for committees with more operationally relevant charters. It may also help drive the nominating process towards candidates with specialized expertise.

Many boards are struggling with the proper level of engagement on technology oversight. Part of this can be attributed to an insufficient board understanding of technology, e.g., a limited number of directors who possess technology backgrounds, or a preponderance of directors whose experience is grounded in a pre-digital environment. Part of this can be attributed to the many compelling issues that compete for inclusion in the board agenda; technology issues often do not receive fair attention. Part of this can be attributed to an inadequate flow of information to the board on technology matters.

Inasmuch as a Technology Committee does not yet constitute “best practice”, it’s hard to point to a “one size fits all” committee charter. Clearly, that will be driven by organizational and industry-specific facts and circumstances. Yet, certain core themes are fairly consistent: evaluating the competitive and strategic implications of technology; monitoring the acquisition and implementation of technology systems; assuring attentiveness to technology trends and to the organizational technology portfolio; reviewing technology expenditures and comparing them against peer organizations; working with external technology consultants engaged by management; and supporting the “technology training” of other board members.

The Technology Committee is typically the direct (but not sole) governance interface for the chief information officer (and possibly the chief information security officer). Important horizontal collaboration and information-sharing between board committees that have technology implications can be supported by a limited degree of overlap between committee members, and by coordinated, active management staff support of these related committees.

Corporate governance must more clearly assert itself as technology becomes increasingly critical to organizational sustainability. The board’s agenda and commitment of resources with respect to technology must keep pace with changes in the relevant technology and in its relationship to strategy and competitiveness. A separate, standing “Technology Committee” is certainly not the only option for the board in this regard, but depending upon the industry--and the applicable competitive circumstances--it may prove a very effective one.

About the Author

Michael W. Peregrine, a partner in McDermott Will & Emery, advises corporations, officers and directors on matters relating to corporate governance, fiduciary duties and officer/director liability issues. His views do not necessarily reflect the views of McDermott Will & Emery or its clients. Mr. Peregrine wishes to thank his partner, Jennifer Mikulina, for her assistance in the preparation of this article.